Goldman Sachs and JPMorgan Chase both beat Q2 expectations—how is the AI wave boosting Wall Street revenue?

On July 14, 2026, Wall Street saw one of the most impactful earnings days in recent years. Goldman Sachs and JPMorgan Chase released their second-quarter results on the same day, both delivering results that far exceeded market expectations—Goldman’s net profit surged 78% year over year, while JPMorgan set the highest quarterly profit record in U.S. banking history. Against a backdrop of ongoing macroeconomic uncertainty, these two earnings releases send a clear signal: market volatility itself is becoming the most powerful earnings engine for investment banks.

How impressive were Goldman Sachs and JPMorgan Chase’s Q2 earnings, really?

Goldman Sachs’ net revenue in Q2 2026 reached $20.34 billion, up 39% year over year, setting a company record; net profit was $6.63 billion, up 78%; diluted earnings per share were $20.98, nearly doubling from $10.91 in the same period last year. This performance significantly beat analysts’ expectations—markets previously expected Goldman’s EPS to be only $14.48.

JPMorgan Chase’s results were just as astonishing. Second-quarter net profit was $21.1 billion, up 41%, setting a quarterly record. Revenue came in at $57.35 billion, up 27.7%, also well above analyst forecasts. After excluding a one-time gain of $4.6 billion from the sale of Visa equity, net profit was $16.9 billion, EPS was $6.14, and return on tangible common equity (ROTCE) reached 23%.

The surge in both investment banks’ performance was not an isolated event. On the same day, Bank of America reported net profit of $9.1 billion, up 26%; Citigroup’s net profit rose 45% to $5.8 billion; and Wells Fargo’s net profit rose 17% to $6.41 billion. The five major banks collectively delivered results that beat expectations on the same day, which is extremely rare in Wall Street’s earnings history.

How geopolitics and AI jointly drive higher market volatility

Since 2026, global markets have faced a layered mix of uncertainties. Tensions in the Middle East have continued to build, with events such as the Iran-U.S. negotiations repeatedly disrupting market expectations; meanwhile, uncertainty brought by transformational changes in the AI industry has pushed market volatility higher from another dimension.

The combined effect of these two forces is that market volatility has stayed elevated. The S&P 500 recorded its best single-quarter return in six years in Q2, and a strong AI-led rally among Asian tech companies drove large-scale deployment of global capital. At the same time, market volatility stemming from ongoing Middle East tensions further amplified clients’ trading demand.

For investment banks’ trading divisions, a high-volatility environment means two things: clients trade more frequently, and bid-ask spread revenue expands. This is the core logic behind why Goldman Sachs’ equity trading revenue jumped to $7.42 billion—when market participants disagree on direction, trading demand naturally spikes.

Why did the trading business become the biggest earnings engine this quarter?

Beyond pure trading, the second-quarter net revenue for Goldman’s Global Banking and Markets segment was $15.52 billion, up 53%, accounting for more than three-quarters of the firm’s total net revenue. Equity trading revenue was $7.42 billion, up 72%, setting the highest historical record for equity trading revenue by a single bank on Wall Street. Just within these three months, equity trading revenue already exceeded the sum of all four quarters of Goldman’s full-year 2019.

From a structural perspective, equity brokerage contributed $4.16B, up 60%, mainly driven by an explosive increase in derivatives and cash equity trading; equity financing contributed $3.26B, up 91% year over year, with the core driver being a significant expansion in institutional brokerage. Fixed income, currencies, and commodities (FICC) revenue reached $4.59 billion, up 32%.

JPMorgan’s trading business also hit new highs. Equity trading revenue rose 86% year over year to $6.03 billion—not only surpassing all analysts’ expectations, but also lifting total trading revenue to a historical record of $12.1 billion. Revenue for the Corporate & Investment Bank (CIB) increased 27% year over year, while markets revenue surged 35%.

Analysts had previously expected total Q2 trading revenue across the five major banks to be close to $39 billion. Based on the figures actually disclosed, trading revenue from just Goldman Sachs and JPMorgan already approached $20 billion in total—far exceeding expectations for the entire quarter’s trading feast.

How the investment banking recovery further amplifies earnings

In addition to trading, a strong recovery in investment banking is another main theme for Q2. Goldman’s investment banking revenue rose 55% year over year to $3.4 billion, the highest quarterly record since 2021. Within that, equity underwriting revenue doubled from $428 million in the prior-year period to $985 million.

SpaceX’s listing was the most landmark event of the quarter. As the largest IPO in history, SpaceX’s listing not only directly contributed underwriting fees, but also boosted confidence across the IPO market. Goldman also helped Alphabet raise more than $80 billion, funding its AI spending.

JPMorgan’s investment banking fees income reached $3.28 billion, up 30%. Bank of America’s total investment banking fees revenue rose 50% to $2.1 billion, and M&A advisory fees surged nearly 68%.

The activity in the M&A market is also not to be ignored. In the first half of 2026, the total announced global M&A transaction value reached $2.5 trillion. The number of “super M&As” worth more than $25k surged to a record high. These deals will be completed and settled sequentially over the next 6 to 9 months, enabling sustained revenue release for investment banks.

Why cost pressure and risk warnings emerge at the same time

On the other side of these strong results, cost pressure and risk warnings also cannot be ignored. Goldman’s operating expenses rose 26% year over year to $11.67 billion, mainly due to higher performance-linked compensation costs. JPMorgan raised its full-year cost guidance to about $107.5 billion, previously expected at about $105 billion. Bank of America’s non-interest expenses rose 8% year over year to $18.6 billion.

Even more notable is JPMorgan CEO Jamie Dimon’s warning. In his statement, he said, “Multiple risks are accumulating beneath the surface, much like the movement of a board of sectors, including geopolitical tensions and war, persistent high inflation, large-scale global fiscal deficits, and elevated asset prices.” He warned that these forces “could trigger material shocks when they collide with each other.”

This warning reveals a deeper paradox: the investment banks’ current excess returns are precisely built on the market volatility generated by these “underlying risks.” When those risks truly materialize, the sustainability of trading revenue will be tested.

Can the volatility-driven investment bank profit model last?

Goldman’s annualized return on equity (ROE) was 23.5%, up further from 21.7% across the first half. JPMorgan’s return on tangible common equity reached 23%. These figures are extremely high in the banking industry, but they rely on the premise of persistently high market volatility.

Based on historical experience, there is a strong positive correlation between investment banks’ trading income and market volatility. When volatility falls back to normal levels, trading income often declines as well. Whether the current high-volatility environment can be sustained depends on the direction of geopolitical developments, AI industry transformation, and macroeconomic policy evolution.

Investment banks themselves also recognize this clearly. In its earnings report, Goldman emphasized that its investment banking pipeline projects have increased both quarter over quarter and year over year, signaling that fee income will continue to be released in the future. JPMorgan, meanwhile, locks in value for shareholders during earnings peaks by raising dividends and repurchasing shares.

Summary

Goldman’s second-quarter net profit was $6.63 billion, up 78% year over year; JPMorgan’s net profit was $21.1 billion, setting the highest quarterly profit record in U.S. banking history. Together, the two earnings reports point to the same conclusion: in a market volatility environment boosted by geopolitical tensions and AI industry transformation, investment banks’ trading and investment banking businesses are going through a rare golden cycle. The five major banks delivered results that beat expectations on the same day, but Dimon’s risk warning reminds the market that today’s excess returns from investment banks and the deep risks that may erupt tomorrow come from the same source. For investors participating in U.S. stock trading via Gate, understanding this logic chain may be more valuable over the long term than chasing short-term earnings numbers.

FAQ

Q1: What was Goldman’s net profit in Q2 2026?

Goldman’s net profit in the second quarter of 2026 was $6.63 billion, up 78% year over year, setting a new company record for quarterly profit.

Q2: What were the main reasons JPMorgan’s Q2 profit hit a record high?

JPMorgan’s second-quarter net profit reached $21.1 billion, mainly driven by a surge of 86% in equity trading revenue to $6.03 billion, as well as a one-time gain of $4.6 billion from Visa equity.

Q3: How does geopolitics affect investment banks’ trading income?

Geopolitical tensions raise market volatility, prompting institutional clients to hedge and execute directional trades more frequently, directly increasing market-making revenue and commission revenue for investment banks’ trading divisions.

Q4: Roughly how much did the five major banks’ Q2 trading revenue total?

Analysts previously expected total Q2 trading revenue across JPMorgan, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley to be close to $39 billion. Based on the actual disclosed figures, trading revenue from just Goldman Sachs and JPMorgan combined has already approached $20 billion.

Q5: What U.S. stock instruments can Gate users trade?

Gate has launched a real U.S. stock trading service, supporting more than 10,000 U.S. stock and ETF instruments, covering major U.S. exchanges including NYSE and Nasdaq.